COMPARATIVE ADVERTISEMENT: A COMPREHENSIVE OVERVIEW COMPARATIVE ADVERTISEMENT: A COMPREHENSIVE OVERVIEW Naveena Durairaj* & Bhavana Duhoon** “Frivolity has become a serious business these days. Television commercials which are meant to portray a stylization of the good life are crafted with great care, using all the skills that the arts and psychology have produced.”1 It is explicable that considering the various market forces and the fierce competition coupled with the ability of the common man to purchase a product, which he deems to be good for himself, comparative advertising has become inevitable. The concept of comparative advertisement has created quite an amount of uproar lately. Since, the liberalizing reforms were introduced in the 1990s every product category has seen a boom in the number of brands. This has led to extensive use of comparative advertising by the companies to promote their product over the others. In India comparative advertisement has taken off in a big way. There has been a paradigm shift from hesitant indirect comparisons to bold and direct comparisons. At present comparative advertisement is not dealt by any specific law in India. Section 29 of Trademarks Act and section 36A of the repealed MRTP Act have been applied in cases where the companies were alleged to have overstepped their liberties in advertising their products. The authors of this article have scrutinized regulations governing comparative advertisement in India and analyzed case laws laying down the protocol to be followed while simultaneously assessing the common law and statute governing comparative advertisement in the US.” * IV Year, ILS Law College, Pune, India. ** IV Year, ILS Law College, Pune, India. 1 Pepsi Co. Inc and Anr. v. Hindustan Coco Cola and Ors., 2003 (27) PTC 305 Del. 134 NLIU LAW REVIEW I. INTRODUCTION In a liberalised economy, there are thousands of entrepreneurs or businessmen who manufacture the same or similar products for the consumers. Their main aim is to maximise the profits and advertising has proved to be a medium of inestimable value for the entrepreneurs to achieve this goal. Commercial advertisers strive to attract the attention of consumers to their products by branding. Incidentally, branding involves a repetition of an image which is generally associated with the product. Advertising, in general, may be a tool to make consumers aware of a certain product, in addition to establishing a product in certain segment of a market.2 In common parlance, comparative advertisement means advertisement of a particular product, or service, which specifically mentions a competitor by name for the express purpose of showing why the competitor is inferior to the product naming it.3 It is a practice primarily used as a promotion technique by naming, directly or indirectly, the product of the competitor to compare one or more attributes or characteristics. Here, the question arises as to whether comparative advertisement is something which is legal, and whether such comparison is equivalent to trademark infringement. The answer to such questions is obvious, yet complex. Advertisement of one’s product is in no way barred. In fact, the Constitution does recognise the right of “commercial speech” under Article 19(1) (a) which deals with freedom of speech and expression. But the underlining point being that such a right is not to be misused. There is a thin line of distinction between puffery and disparagement, the two elements of comparative advertisement. Puffing, in general, is a superlative claim made about one’s product; and is typically understood as being so superlative that an average consumer would not believe the claim.4 Disparagement, on the other hand, is ‘to dishonour by comparison with what is inferior.’5 2Francesca Barigozzi and Martin Peitz, Comparative Advertising and Competition Policy (Sept. 5, 2012), http://amsacta.unibo.it/1563/1/524.pdf. 3 Karan Gandhi and Anurag, Competition and Comparative Advertising, 4 INDIAN LEGAL IMPETUS, 10 (July, 2011). 4Sharad Vadehra et al., Puffing-Commercial Disparagement (Sept. 9, 2012), http://www.gala- marketlaw.com/joomla4/index.php?option=com_content&view=article&id=250&Itemid=12 3. 5 THE CHAMBERS ENGLISH DICTIONARY 409 (1992) . 135 COMPARATIVE ADVERTISEMENT: A COMPREHENSIVE OVERVIEW Traditionally, puffing of one’s products is allowed. Whereas when such puffing up denigrates the product of another, resulting in disparagement, it has leverage to attract an immediate injunction. Another factor, which needs to be kept in mind to determine whether in a case injunction should be granted or not, is the interest of the consumers. Careful consideration needs to be given to the fact as to whether an average man would be confused, deceived or lured by the advertisement in question. This is where there is an interface between consumer interest and the interest of the competitor. Therefore, in conclusion, comparative advertisement can be allowed only to the extent that it does not in any way disparage the product of the rival, and at the same time it should not have the element of confusing the average man, which would lead to luring or deceiving him into buying the particular brand product. This is very subjective and depends on the facts of different cases. However, over a period of time the courts have tried to lay down the guidelines for comparative advertisement which will be discussed in the article. II. STATUTORY PROVISIONS The Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the MRTP Act) which is now repealed, was the first step towards regulation of competition in the market. Section 36A of the act defined ‘unfair trade practice’ (hereinafter to be referred as UTP). The same has also been elucidated under Section 2(1)(r) of Consumer Protection Act, 1986. If any firm/company/person for the purpose of promoting its sale, supply of goods and services, adopts any unfair method so as to mislead people on quantity, quality, standard, need, usefulness, performance, efficacy, or gives false guarantee of goods or services, or falsely mislead people on goods, services or trade of another person, it amounts to ‘unfair trade practice’. Comparative advertising has UTP as a component. When an advertisement provides misleading facts in order to disparage the goods of the competitor, it falls under section 36A of the MRTP Act. This provision of UTP limited comparative advertising by recognising that the publishing 136 NLIU LAW REVIEW of any misleading or disparaging facts about a competitor’s goods or services amounted to ‘unfair trade practice’.6 The angle of trademarks was introduced in the Indian scenario when the Trademarks Act, 1999 was implemented. Section 29(8) of the act lays down the conditions under which a trademark is infringed in advertising. They are: 1. When the advertisement takes unfair advantage of and is contrary to honest practices in industrial or commercial matters. 2. Is detrimental to its distinctive character. 3. Is against the reputation of the trademark. The MRTP Act and the Trademark Act together provided a base for the regulation of comparative advertising in India. The UTP provisions under the MRTP Act have not been included in the Competition Act of 2002 which was enacted in place of MRTP. Therefore, comparative advertising has now become a subject of only the Trademarks Act and the Consumer Protection Act. Also, the law laid down by courts and tribunals in various cases now plays an imperative part in the regulation of comparative advertisements. In Reckitt Benckiser v. Hindustan Lever7, the court noted that sections 29(8) and 30(1) of the Trademarks act dealt with disparagement and comparative advertisement with regard to trademarks. Disparagement occurs when an advertisement denigrates or disseminates the products of others so that the product it represents gains more popularity than the other products, amongst the masses. A trader is entitled to boast about his product for the purpose of its promotion only, however untrue the boast may be, and for that purpose can even compare the advantages of his goods over the goods of another. However, the competitor’s goods cannot be mentioned in a disparaging manner.8 Disparagement in India has been identified mostly through judgments. One of the earliest examples of disparagement that can be mentioned is the case Chloride Industries Ltd. v. The Standard Batteries 6Ameet Datta, Comparative Advertising in India – Puff under scrutiny (Dec. 2, 2009), http://www.iam-magazine.com/reports/Detail.aspx?g=5509d118-a8d7-4d57-84b5- 4a917bf824d2. 7 Reckitt Benckiser v. Hindustan Lever, (2008) 38 PTC 139. 8Safir Anand and Shivli Katyayan, Legal Issues in Advertising: Major Implications for IP Rights, 28 INTELLECTUAL ASSET MANAGEMENT, 176, 179 (Feb.-Mar. 2008). 137 COMPARATIVE ADVERTISEMENT: A COMPREHENSIVE OVERVIEW Ltd.9 The Calcutta HC held that if the goods are disparaged maliciously or with some other such intent to injure and not by way of fair trade rivalry, the same would be actionable. Under the Competition Act, 2002 provisions have been made for the transfer of cases on dissolution of MRTPC. As per sub-section (3) and sub- section (5) of section 66 of the Competition Act, 2002, the following cases shall be referred to the Competition Appellate tribunal: 1. All cases pertaining to Monopolies and Trade Practices or Restricted Trade Practices including such cases in which Unfair Trade Practice has also been alleged. These cases would have arisen under sections 31 and 37 of the MRTP Act. 2. All cases pertaining to Unfair Trade Practices referred to in clause (X) of sub section (1) of section 36A of MRTP Act. These cases relate to giving false or misleading facts disparaging the goods, services or trade of another person. However, there is no provision for Unfair Trade practices under the new Act. In order to move away from the rigid structure of the MRTP Act, the UTP definition has not been incorporated anywhere in the new legislation.